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Saturday, January 30, 2010

Overseas Chinese Mutual Help: Anti-poverty Tactic

In Southeast Asia, some ten million Overseas Chinese are exceedingly wealthy, while around 400 million natives suffer varying degrees of poverty. Why? History provides answers. In the 1600s to 1800s, all of Southeast Asia save Thailand was colonized by Western powers. Chinese entrepreneurs who were already trading with Southeast Asians saw the profit-making opportunity in colonial rule. They supplied Chinese labor to colonial plantations, shipbuilding yards and state projects. They served as tax collectorson commission, which further cemented their ties with the colonists, who stayed mainly in cities. The same Chinese entrepreneurs built trading nets region-wide, buying spices, raw sugar, rubber, coffee, fibers, tobacco and other semi-processed products from natives and selling them to colonial companies that exported to European and US markets. From Hong Kong and Singapore came Western consumer goods which the entrepreneurs sold in region-wide retailing nets. The Chinese had become indispensable to both colonizers and colonized.
When revolutions drove away the colonizers, the native governments inherited dependence on Chinese business nets and their international supply sources. Native governments tried to build native businesses but their limited resources and the absence of a strong entrepreneurial culture among the masses hardly brought a dent to the 60%-70% Chinese control of Southeast Asian business. The Chinese tradition of mutual help contributed to the huge wealth gaps. Chinese families, clans, village mates and Chinese with ‘face’ (good character and ability to pay) formed mutual help associations that provided loans in cash and merchandise. Inability to pay meant loss of ‘face’ so Chinese debtors worked day and night to repay their loans and thereby borrow more. Nose-deep debt coupled with isolation among natives with different mindsets forced among Overseas Chinese a culture of hard work, thriftiness, pragmatism, and desire for wealth to provide for an uncertain future. Native hostility which in several cases led to murders and pogroms of Chinese pooled some $2 trillion in Chinese capital towards Hong Kong and Singapore, where they became sources of even larger loan funds for all Chinese region-wide. No native could penetrate such ‘closed circuit’ business culture.
Hardly any native tried anyway, for most were religious who viewed wealth as ‘source of all evil.’ In the Philippines, 400 years of religious instruction drilled into the native subconscious the paralyzing notion that wealth is an impediment towards ‘permanent happiness in heaven,’ and instead creates ‘mere fleeting earthly joys.’ From early 1900s onwards, Communist propaganda added the equally debilitating idea that all landlords and businessmen are exploiters. Subdividing old wealth, not creating new wealth was the recommended ideal, something that some 40,000 armed rebels fought for in the 1970s and which has largely paralyzed rural business nationwide.
In some sense the religious and political propagandists were right, for Southeast Asian politicians who partnered with Overseas Chinese in setting up corporations (the Suharto group had 400, Marcos had 300 in 1986) were not exactly paragons of virtue. The region’s billionaire Overseas Chinese ‘taipans’ who owned or controlled 20 to 80 companies each were not ‘mass-friendly’ either. Nor did the region’s entrepreneurial class build enough businesses to employ some 400 million poor in jobs that guarantee at least lower-middle class incomes. Instead most entrepreneurs considered labor as ‘business tools,’ flaunted their wealth, imported all manner of luxuries, acted like royalty, and abused all powerless. Wealth it appeared, is truly no way to get to heaven.
Yet there are historical instances in the region when wealth and virtue actually mixed. In 1600s-1800s Philippines for instance, Spanish-native religious communities multiplied donations of land, cash, jewelry and other forms of wealth by engaging in the highly profitable Manila-Acapulco galleon trade, running universities, hospitals, and schools, and lending money to traders. The Spanish friar orders also titled some 200,000 hectares of agricultural land and rented them out to Filipino-Chinese (mixed blood) entrepreneurs engaged in the sugar export, retail and money-lending trades. Yet not one member of the religious communities ever got wealthy. Most community profits went towards the running of orphanages, homes for the aged, scholarships, aid to indigents and the sick, milk to infants of poor parents, and even part of the huge ransom paid to the English fleet that once occupied Manila. In end-1890s the religious friars were driven out by native revolutionaries but the Americans came in as new colonizers. The new government awarded friar lands to ‘natives’ who of course turned out to be the wealthy Filipino-Chinese who rented the lands. ‘Wealth for good’ became history, for the new owners had nothing in mind but to become part of the local oligarchy. Thankfully, new religious institutions continued the culture of unending charity works by running hospitals, universities, and schools and using most profits to finance good works.
What are the anti-poverty lessons? Economic history shows that culture and religious beliefs play a major part in the wealth and poverty of peoples. Unfortunately in the Philippines, ‘excessive wealth’ is still viewed as root of evil, and one is supposed to aspire only to the middle classes. Since one cannot maintain middle class incomes without investing in business (which means possession of ‘excessive wealth’), the most that Filipinos can set up are micro-scale buy/sell or crafts businesses. Few native entrepreneurs even think of merging their small businesses to access world markets. All Philippine business production cannot even match the sales of a single major US or Japanese corporation. Native business associations for mutual help are mainly social clubs where members probe for business opportunities largely in government. 'Face' is no guide, as evidenced by fine-print contracts at every transaction.
As one may see from these, the way out of poverty would require the reshaping of millions of people’s mindsets, especially those of 3rd World ‘natives.’ It can take ages to unlearn such beliefs as ‘money is the root of all evil,’ but it can be done thru such aphorisms as ‘wealth is a tool for good.’ Words however are of little effect. Examples are best. To really end poverty, the 3rd World needs ‘large-scale’ exemplars: millions of employees as thousand-member entrepreneurial groups setting up corporations thru state funding laws and joint ventures with 1st World companies. The scheme raises the incomes of 3rd World employee masses (who earn just $200-$500 monthly), while creating millions of jobs for the bottom poor all throughout eternity (courtesy of eternal laws). ‘Business as tool for good’ thereby becomes world culture, a source of spiritual fulfillment for all humanity.

About Me

Author is a Bus.Adm. Marketing graduate from University of the East, Manila Philippines. He has worked as bank credit investigator, as Research Section Chief for a World Bank-funded co-ops development program of a gov't agency, as fishing boat partner, as dept. secretary of Saudi Shell, as farmer and passenger jeep operator, and as director's secretary, Saudi Min.of Interior. Author has researched rich-poor gaps and elite wealth-making ways for over 40 years as an obsession. Some results are posted in this blog. The findings recommend an imperative towards a happier human history: your leadership in a world-scale anti-poverty war!